Jump in investment as pattern of the recovery changes
Thursday 23 February 1995
Gross domestic product increased by 3.9 per cent last year - slightly lower than the initial "flash" estimate. Its fourth quarter increase was unchanged at 0.8 per cent. The rise in the GDP deflator, the widest measure of prices in the economy, was the lowest since 1960 at 1.8 per cent.
In the fourth quarter, investment expenditure grew by 1.4 per cent, although this welcome jump was not enough to offset falls earlier in the year. The year-on-year rise in investment was 2.9 per cent - lower in this recovery than in previous cycles. Stockbuilding rebounded after a weak third quarter, and contributed 0.4 points of the 0.8 percentage point 4th quarter increase in GDP.
Trade's contribution to total GDP was negative, after strong gains in the second and third quarters. Consumer spending was stronger than expected - especially spending on durable goods apart from cars. It climbed 0.6 per cent in the quarter and 2.5 per cent in the year.
Analysing growth by category of output rather than expenditure, industrial production rose 0.5 per cent last quarter, taking it to a level 3 per cent higher than the the peak of the last business cycle - though manufacturing output has not yet regained its previous peak. Services output grew faster last quarter, rising 0.9 per cent.
The fastest-growing services category was transport and communications, helped by a rebound after the rail strike. Telecommunications are also expanding strongly.
Other fast-growing areas are professional and technical services, such as legal services, computer services and management consultancy. On the other hand, estate agency and advertising fell back at the end of the year. Accountancy expanded only weakly, while banking and finance were flat.
GDP has expanded 7.8 per cent from the trough of the recession in 1992. Its rise in the second half of last year was significantly slower than in the first half.
Most economists said yesterday's figures confirmed that the pace of recovery was slowing down. Michael Saunders at Salomon Brothers, said: ``The strength of exports may not be enough to outweigh the squeeze on domestic demand from tight fiscal policy and rising base rates.''
The latest forecast from the National Institute for Economic and Social Research, an independent research body, also shows growth slowing down. It predicts the economy will expand 3.2 per cent this year, partly because it assumes interest rates will continue to rise.
However, a new City forecast predicts faster growth this year than last. Andrew Cates, an economist at UBS, said consumer spending would revive thanks to rises in wages and the number of jobs, while investment spending would grow strongly.
Diving in at the deep end is no excuse for shirking the style stakes
- 2 Loom bands: Bids for dress made from colourful rubber reach almost £154,000 on eBay
- 3 PornHub begs users to stop uploading video clips of Brazil getting beaten 7-1
- 4 Why I'm on the brink of burning my Israeli passport
- 5 L'Oreal cuts ties with Belgium supporter Axelle Despiegelaere after hunting trip photographs
Instagram of US airport security chiefs: Lipstick knives and IED training kits among items seized
Game of Thrones author George RR Martin says 'f*** you' to fans who fear he will die before finishing Westeros saga
Loom bands: Bids for dress made from colourful rubber reach almost £154,000 on eBay
Israel-Gaza crisis: Eight killed in Gaza Strip cafe while watching World Cup semi-final
Supermoon 2014: When and why will the moon look bigger and brighter this summer?
Sustained immigration has not harmed Britons' employment, say government advisers
Australia facing international condemnation after turning around Sri Lankans at sea
7/7 memorial defaced on anniversary of 2005 attacks with ‘Blair lied thousands died’ graffiti
Even when it brutalises one of its own teenage citizens, America is helpless against Israel
Socialist Worker called to apologise over ‘vile’ article saying Eton schoolboy Horatio Chapple's death is ‘reason to save the polar bears’
There’s a nasty smell in the political air – and it’s coming from the Tories
iJobs Money & Business
£50000 - £70000 per annum: Harrington Starr: Business Analyst Consultant (Fina...
£300 - £350 per day + competitive: Orgtel: My client, a leading bank, is curre...
£28000 - £32000 per annum + pension, 25 days holiday: Ashdown Group: A highly ...
Negotiable: Randstad Education Birmingham: Randstad Education are seeking a Fi...